Monday, February 21, 2005

Matthew Simmons, a Houston energy investment banker, used to take on faith what everyone seemed to know was true: the Middle East and Saudi Arabia, in particular, have all the oil we'll need to keep the world growing for the next 50 years. Then, he looked into it himself. After reviewing all of the available journal articles and scouring other sources, he came to a disturbing conclusion: There is no evidence supporting the notion that the Middle East will be able to increase production in a big way. He asked the Saudis for more information. So far, all they've offered are hollow assurances, but not a speck of proof. No one has been allowed to audit their records or their fields since the late 1970s. Simmons had been saying that the lack of information prevents us from understanding the true picture of worldwide oil reserves. He concluded that we may be at or near a peak in world production, but without more information it's difficult say for sure.

Now, he's gone further in this interview with the much-maligned Aljazeera news network. "We may have already passed peak oil," Simmons told the network. He believes that the evidence supports the idea that the Saudis have damaged their oil fields by overpumping. (Overpumping reduces the total output of an oil field over its life and can lead to sudden, unexpected drops in production.) That would spell a peak for Saudi Arabia and perhaps the world.

Simmons lays out his concerns in visual form in a slide presentation on his company's website. It's worth looking at if you know little about the peak oil debate.